Market research reveals why consumers are drawn to wineries in Michigan

Though Michigan's wineries and grape industry ranks fourth in the United States in economic impact, challenges remain. Dan McCole is working to overcome some of the issues.

January 21, 2016 - Author: James Dau

In 1980, Michigan was home to 10 wineries and just over 200 acres of vineyard land. Today, those numbers have skyrocketed to more than 200 wineries and nearly 3,000 acres dedicated to wine grape production, representing more than $790 million in annual production value.

The center of Michigan’s viticultural production lies along the Lake Michigan shoreline, from Leelanau and Grand Traverse counties in the north to Berrien and Van Buren counties in the south. The recent proliferation of wineries and vineyards, however, has brought wine and grape production to statewide prominence. Though the industry ranks fourth in the United States in economic impact, challenges remain. Dan McCole, Michigan State University (MSU) AgBioResearch tourism and sustainability researcher, is working to help overcome some of the issues.

The harsh winter of 2013-14 exacted a toll on Michigan’s vineyards. Near-total ice cover on Lake Michigan dramatically reduced grape yields and inhibited the growth and development of high-quality fruit. According to some estimates, Michigan grape growers lost 50 percent of their crop. Through a four-year project sponsored by the U.S. Department of Agriculture, McCole’s research team is working to help vineyard owners find new wine grapes with the hardiness to withstand the effects of extreme cold and the capability of pleasing wine consumers.

“There have been a number of viticultural advances that allow vineyards to produce hybrid wine grapes that can survive harsher weather and ripen in the course of a shorter growing season,” said McCole, an associate professor in the MSU Department of Community Sustainability. “We are doing a study now to learn more about consumer preferences for wines made with these cold-hardy grapes so that wineries can make data-based decisions about which grapes they use in their winemaking.”

To do this, McCole and his team hit the road, traveling to a number of wineries featuring wine made from cold-hardy Marquette grapes. Marquette is a hybridization of pinot noir and the American native grape Vitis riparia, developed at the University of Minnesota in 2006. McCole’s team wanted to study consumers’ willingness to pay for wines made from Marquette to determine market viability. Presenting visitors with four different Marquette wines, the team began by asking participants to estimate how much they would be willing to pay per bottle on the basis of appearance and aroma. After that, they were given a sample and asked to amend their estimates on the basis of taste. Finally, the team informed the participants of Marquette’s potential value to the industry as a cold-hardy grape, after which they were asked to make a final adjustment to their estimates.

Though the study is not yet complete, preliminary results suggest that information about the grape’s value to the industry does have an impact on consumers’ willingness to pay.

The cold-hardy grape research is just one example of how McCole is helping the winery industry as a whole. Most Michigan wineries, in contrast with their counterparts in California, are small operations, primarily selling from tasting rooms rather than major retail outlets. Most simply cannot afford to engage in lengthy, detailed market research. McCole and his team stepped in to help the state’s wineries better understand their customers.

A number of important characteristics about Michigan winery customers emerged from this work, some surprising. For example, most customers are casual drinkers without extensive background knowledge about wines. They are drawn less by the desire to test their refined palettes than by the enjoyable atmosphere or the social experience of wine tasting.

“This is an important finding because, though winery owners are reading stories about wine drinkers in trade magazines, these aren’t their tasting-room customers,” McCole said. “Our wineries need to focus on the aspect that their customers find the most important — the experience of the visit itself.”

The data allowed McCole to better understand the economic impact of wine tourism in the context of other wine-related activities, such as winemaking and grape production. This study has helped the Michigan Department of Agriculture and Rural Development (MDARD) incorporate the importance of wine tourism in its planning. McCole’s team is now working to replicate and validate this study in Minnesota and Wisconsin. Furthermore, MDARD has requested that the study be conducted again next year to provide an update.

The long-term sustainability of the winery industry is of crucial importance to Michigan communities, McCole pointed out.

“Wine is a great example of how communities can be more sustainable,” he said. “Wine grapes are in growing demand. The processing is usually done locally, creating jobs in the communities that grow them, and wineries attract tourists, which create other complimentary business opportunities such as breweries and art galleries. Suddenly you have a vibrant community that retains its young people and continues to grow.”

The winery industry is expanding not only in Michigan but around the country. Since 1940, it has expanded from 1,000 locations to more than 8,000 with no indication of slowing down in the near future.

“Tourism and travel have great potential to help communities,” McCole said. “It helps diversify local economies and gives communities a reason to protect their natural resources, but that’s not the whole picture. There is so much research to show that traveling together strengthens relationships and families. In our busy lives, where everyone has a device in their hand and a thousand demands on their time, vacations and day trips to places like a winery are often a rare chance to spend time together.”